As I have discussing in this blog, Immigration and Customs Enforcement (ICE) is ramping up it worksite enforcement activities. Recently, after ICE issued a Notice of Inspection (NOI) and Notice of Suspect Documents to an unnamed staffing company for Cloverhill Bakery of Chicago, Illinois, approximately 800 employees were terminated or quit due to being undocumented workers.

Cloverhill Bakery, a part of the Swiss-based international company, Aryzta AG, lost about 35% of its workforce due to the staffing company’s employees being undocumented. As one can imagine, losing 35% of your workforce has made it difficult to meet production of products for its customers, fast-food chains and supermarkets.

Although press reports referred to ICE’s action as a raid, it was not such; rather it was an inspection of the staffing company’s employees’ I-9 forms. The inspection of the I-9 forms is accomplished by the delivery of a NOI/subpoena by ICE agents.

The NOI was issued earlier in 2017 and caused one of the largest groups of employees to lose their jobs due to lack of work authorization in 2017. Since the NOI occurred earlier this year, ICE did not take any actions to detain the 800 undocumented workers. Recently, ICE announced that it planned to detain undocumented workers found at employers’ facilities.

If you are worried that your company is going to be the next ICE target, I recommend you get prepared now. The best way is to have an immigration attorney, well-versed in I-9 forms and worksite enforcement, conduct an internal I-9 audit. Alternatively, if you want to get a better understanding of immigration compliance for employers, I recommend you read my new book, The I-9 and E-Verify Handbook, which is available at http://www.amazon.com/dp/0997083379.

At a recent FBA Conference in Chicago on Worksite Enforcement, there was a panel discussion on negotiating with Immigration and Customs Enforcement (ICE) during an inspection – hosted by attorneys Sharon Mehlman, Marcine Seid, and Eileen Momblanco. In this article, I will elaborate upon some of the talking points from that discussion and other negotiation strategies.
During an investigation by ICE, after receipt of a Notice of Inspection (NOI)/subpoena, there are several opportunities to negotiate with the agency.

Negotiating Point #1 - Subpoena
The first negotiable is the date by which the I-9 forms must be provided. The NOI states the I-9 forms and other subpoenaed documents must be provided to ICE within three business days of service of the NOI. Often times, however, a short extension of up to 10 days can be obtained if counsel contacts the ICE officer or auditor on the case and provides an appropriate reason for the extension (e.g. small HR staff; thousands of I-9 forms, counsel was just hired, etcetera). The decision to grant an extension is discretionary, and some ICE offices refuse to grant any extensions.

Negotiating Point #2 – Notice of Suspect Documents
If a company receives a Notice of Suspect Documents (NSD), after supplying the I-9 forms, it used to be common practice to negotiate what was a “reasonable” period to resolve the work status of those on the NSD. Now, all NSDs state the employer has 10 days to do so. In a liaison meeting with the American Immigration Lawyers’ Association (AILA), ICE stated that the 10 days is not a national policy although many regions treat it as such. However, in other regions this 10-day period is negotiable if the employer can show the impact that the loss of unauthorized employees will have on U.S. citizen employees and/or the community (e.g. the facility will be forced to shut down due to a lack of employees).

Negotiating Point #3 – Notice to Employees
On some occasions, ICE will negotiate a “roll-out schedule” for notification of employees listed on the NSD. After receipt of the NSD, the employer notifies those employees that ICE has determined their work authorization is invalid, and requests documentation from the employee to rebut ICE’s finding. With a roll-out schedule, the employer does not have to notify all employees on the NSD at the same time.

Negotiating Point #4 – Proposed Penalty Amount
The proposed penalty amount set forth in the Notice of Intent to Fine (NIF) is the most important point to negotiate. Before starting negotiations, counsel must inform ICE in writing that they wish to have a hearing before the Office of the Chief Administrative Hearing Officer (OCAHO). If counsel fails to do so, then the NIF will become final in 30 days.
Most ICE attorneys are amenable to negotiating a reduction in the proposed penalties. There are a number of arguments that counsel can make for a reduction, such as:

ICE listed technical error as a substantive error;

ICE incorrectly applied the five mitigating/aggravating factors;

ICE counted an employee twice in the NIF;

for timeliness violations – beyond the five year statute of limitations;

the company was not required to have I-9 form because the individual is an owner with substantial control or was hired on November 6, 1986 or beforehand;

math errors by ICE; and

for poor financial condition of the company established by financial records (this is a powerful tool for reducing the amount of the penalty and lengthening the time to pay the penalties – sometimes up to five years).

Negotiating Point #5 – Press Release
The last negotiable item is the press release and whether ICE is going to publicize the settlement of the matter. However, in many parts of the United States, ICE never issues a press release for settlements.

Takeaway
It is important to engage immigration compliance counsel as soon as a company is served with an NOI. As shown above, legal counsel can help to lessen an employer’s burden, avoid common pitfalls and negotiate at numerous points during the ICE inspection process.

OCAHO surprised a lot of people this month when it dismissed 337 out of 381 alleged I-9 violations in U.S. v. Foothill Packing. In doing so, Immigration and Customs Enforcement’s (ICE) proposed penalties were reduced by $149,000.

Foothill is a fruit and vegetable packing company with an office in Somerton, Arizona. In March 2012, ICE served the company with a Notice of Inspection and subpoena. It is undisputed that the original auditor for the inspection only requested the I-9 forms without documentation. A later ICE auditor testified he requested supporting documentation. Interestingly, neither party produced the subpoena to OCAHO.

Foothill primarily hired its employees through the H-2A nonimmigrant temporary agricultural visa program and obtained the employees’ Mexican passports, which included their I-94 and H-2A visa. Foothill management repeatedly offered these documents to ICE auditors, but ICE refused them. At the end of the investigation, ICE cited Foothill with 337 violations for failing to record the pertinent foreign passport information in Section 2 of the I-9 forms or present copies of the passports.

If Foothill had provided the I-94s and H-2A visas, ICE said these violations would have been treated as technical violations. However, ICE noted that copying these documents still did not relieve Foothill from its responsibility to fully complete the I-9 forms. Foothill asserted that, according to the Virtue Memorandum, the “failure to enter the foreign passport information is a technical violation if a copy of the document is presented at inspection”. OCAHO found that the Virtue Memorandum actually states the omission of a document number or expiration date in Section 2 is a technical violation, if a legible copy of the document is retained and presented. Despite this finding by OCAHO, it determined Foothill should not be found in violation for these I-9s because of the ICE auditor’s statements that supporting documentationwas not needed.

OCAHO further found that Foothill made “diligent efforts at the outset of the investigation to provide copies of the Mexican passports” and cannot be liable for failure to present documents that the government refused to accept. 337 of the alleged violations were dismissed.

Knowingly Employing an Undocumented Worker

On a separate issue, OCAHO found Foothill knowingly employed an unauthorized worker based upon the fact the employee was hired in June 2010 but presented an employment authorization card which expired on August 5, 2003. Because Foothill chose to accept an expired document without making further inquiry, the company had actual, or at least, constructive knowledge of the employee’s unauthorized status. OCAHO increased ICE’s proposed penalty of $375 to $2,200 (which is still below the maximum of $3,200 for a first offense).

Calculation of Fines

As to the remaining alleged violations, OCAHO found Foothill committed 44 substantive violations, ICE sought a penalty of $440 per violation which OCAHO found to be in the midrange of permissible penalties. Thus, OCAHO assessed a penalty of $19,360 for the 44 substantive violations. Together with the $2,200 penalty for knowingly hiring one unauthorized worker, Foothill’s total penalty came to $21,560.
The Takeaway

This case provides a unique example where an employer was able to seize on ICE auditors’ directions to substantially reduce its liability. It highlights the importance of compliance attorneys discussing with their client any conversations they may have had with ICE when the subpoena was served.

A copy of the OCAHO decision is available here.
Cite as United States v. Foothill Packing, Inc., 11 OCAHO no. 1240 (2015).

The former owner of Danny’s Family Car Wash and more than a dozen of the company’s former managers and supervisors, were sentenced in federal court in Arizona last month. The defendants pleaded guilty to their roles in a multi-year corporate scheme involving identity theft to employ undocumented immigrants.

The investigation into the company was led by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and resulted in the arrest of more than 30 suspects including operators, managers, and employees connected with Danny’s Family Car Wash.

Beginning in April 2011, the car wash was audited by ICE HSI agents and forced to terminate over 900 employees after the audit found employees had presented fraudulent, insufficient, or ineligible documents at the time of their initial hire. The company attempted to replace the 900 employees with individuals who were authorized to work, but according to ICE those legal replacements were “too expensive” and the car wash’s owner, Danny Hendon, instructed his managers to “bring back” the old employees.

As a result, Danny’s Family Car Wash was found to have engaged in a multi-year, company-wide scheme to rehire undocumented immigrants using stolen identities in order to pass E-Verify checks. The scheme continued until August 2013, when ICE HSI special agents executed search warrants at the car wash’s corporate headquarters and at various worksite locations. Over 230 unauthorized aliens were found working at the car wash’s locations on the day of the search.

Danny’s Family Carwash owner, Danny Hendon, was sentenced to 12 months in prison and one year of home confinement. The corporate entities that composed the car wash chain forfeited bank accounts totaling $156,295.77, and Hendon agreed to divest himself of any future ownership, managerial or profit-sharing interest in the organization. The other defendants received sentences ranging from probation to three months in prison.

Grand America Hotels and Resorts, a subsidiary of the Sinclair Services Company, will forfeit $1.95 million for hiring unauthorized workers pursuant to a non-prosecution agreement between the company, the U.S. Attorney for the District of Utah and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

In reaching this agreement, the company will avoid criminal prosecution in exchange for its full cooperation and remedial action in the wake of HSI's investigation into the hiring practices at its hotel and resort properties in Arizona, California, Idaho, Wyoming and Utah.

According to facts set forth in the agreement, several lower-level Grand America employees and mid-level managers conspired to re-hire unauthorized workers despite an ICE audit of I-9 forms that began in September 2010. A year later, ICE-HSI issued a Notice of Suspect Documents to Grand America stating that 133 employees were not authorized to work in the United States. After the Notice, the employees could not produce documentation that they were authorized to work. The company was issued a warning notice and Grand America informed HSI that it had terminated the employees.

However, HSI later discovered that the conspirators created three temporary employment agencies or “shell companies” between August 2011 and October 2011, to re-hire 43 of the unauthorized workers. The agreement says most of the workers returned to work using different names and fraudulent identity documents.

In addition to forfeiting $1.95 million to the Department of Homeland Security (DHS), Grand America will be required to take substantial remedial measures, which could cost up to $500,000 to implement. Such measures include: adopting new corporate policies to comply with immigration law; incorporating immigration law compliance clauses into the company’s labor service contracts; re-training human resources employees on I-9 compliance procedures; and agreeing to continue using E-Verify in the hiring of new employees. Grand America also agreed to retain immigration counsel to advise the company regarding hiring and immigration procedures.

Grand America avoided criminal prosecution and fully cooperated with HSI’s investigation. Prosecutors said the company handed over all incriminating evidence it obtained through its own internal investigation, and fired the managers who were involved in the conspiracy. The government will seek to prosecute the conspirators separately.

This news is a reminder to employers of the wealth of remedies available to ICE-HSI for immigration violations.